The truck freight market continued to underperform the broader economy during the first quarter. This is reflected in the U.S. Bank National Shipments Index, as it contracted significantly from both the final quarter of 2023 and a year earlier. Several factors contributed to declining truck freight levels during the first three months of the year, including bad winter weather in many parts of the country. While there are indications that freight levels rebounded slightly in February, a strong March freight market didn't materialize as it would during a typical first quarter.
While this was a tough season for motor carriers, shipper spend fell substantially during the first quarter. In the end, shipping capacity was still high compared with the amount of freight available, leading to lower spend.
Many sectors of the economy generate truck freight, but household consumption of goods was one major factor in freight volumes contracting during the first quarter. While retail sales grew modestly, they were far too low to generate significant additional truck freight. Reviewing available Census Bureau data, retail sales were up in the 0.5% to 1.5% range compared with a year ago. However, if adjusted for inflation, retail sales likely fell in the 1.5% to 2.5% range, which is a better indicator of freight volumes because it removes price effects.
Other sources of freight, like home construction and factory output, were flat during the quarter, also impacting shipment volumes. Furthermore, international trade was affected by various factors that slowed shipments, including the conflict in the Red Sea targeting cargo ships. According to the 2024 Q1 U.S. Trade Report, West Coast ports saw an increase in imports, while reductions occurred in southern and eastern ports due to re-routing from the Suez and Panama Canals. Many ships were forced to adjust routes, adding significantly (up to two weeks) to transit times, making for a challenging quarter for truck freight.
National shipments and spending
The Q1 2024 U.S. Bank National Shipments Index fell 7.8% compared with the fourth quarter of 2023, a smaller decline than the 10.9% drop during the fourth quarter. While many in the trucking industry are expecting the freight market to turn around, the shift did not happen during the first quarter. Another factor behind lower freight volumes was the inventory cycle. Specifically, retailer inventories have recently drawn down to more normal levels after being too high for a number of quarters. However, retailers didn't immediately start replenishing inventories, which would have helped freight volumes.
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